Global non-linear effect of temperature on economic production

By Marshall Burke, Solomon Hsiang, Edward Miguel. Nature, 2015

2,437 citations recorded by the source corpus.

Growing evidence demonstrates that climatic conditions can have a profound impact on the functioning of modern human societies, but effects on economic activity appear inconsistent. Fundamental productive elements of modern economies, such as workers and crops, exhibit highly non-linear responses to local temperature even in wealthy countries. In contrast, aggregate macroeconomic productivity of entire wealthy countries is reported not to respond to temperature, while poor countries respond only linearly. Resolving this conflict between micro and macro observations is critical to understanding the role of wealth in coupled human–natural systems and to anticipating the global impact of climate change. Here we unify these seemingly contradictory results by accounting for non-linearity at the macro scale. We show that overall economic productivity is non-linear in temperature for all countries, with productivity peaking at an annual average temperature of 13 °C and declining strongly at higher temperatures. The relationship is globally generalizable, unchanged since 1960, and apparent for agricultural and non-agricultural activity in both rich and poor countries. These results provide the first evidence that economic activity in all regions is coupled to the global climate and establish a new empirical foundation for modelling economic loss in response to climate change, with important implications. If future adaptation mimics past adaptation, unmitigated warming is expected to reshape the global economy by reducing average global incomes roughly 23% by 2100 and widening global income inequality, relative to scenarios without climate change. In contrast to prior estimates, expected global losses are approximately linear in global mean temperature, with median losses many times larger than leading models indicate.

Subfields: Economics and Econometrics, Global and Planetary Change, Health, Toxicology and Mutagenesis

View Paper: https://www.semanticscholar.org/paper/e6d91e300701bf9cb952a6ba0766252c42664127

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Citations in the corpus

The GDP-Temperature relationship: Implications for climate change damages (2021, positive): “Like Hansen et al. (2011), we employ a decision rule that iteratively eliminates the model with the greatest standardized loss relative to the average of models remaining in the consideration 40Note that, in the levels effect models, the weather functions depend on the first difference of temperatur”
Feeling the Heat: Climate Risks and the Cost of Sovereign Borrowing (2021, background): “However, more recently, there has been some work to show that climate-related disasters can lead to migration within and between countries, which may induce political instability (e.g., Black et al. 2011; Burke, Hsiang, and Miguel 2015b).”
Global warming has increased global economic inequality (2019, background): “Lagged responses can compensate the growth effects of temperature fluctuations, leading to decreases in both the growth benefit in cool countries and the growth penalty in warm countries (4).”
The Light and the Heat: Productivity Co-Benefits of Energy-Saving Technology (2019, positive): “4 The impacts of temperature on productivity appear to hold quite consistently across countries and time (Burke et al., 2015; Dell et al., 2012).”
The appallingly bad neoclassical economics of climate change (2020, neutral): “…output by 23% in 2100 relative to a world without climate change, although statistical uncertainty allows for positive impacts with probability 0.29 (Burke et al., 2015, pp. 237 – 38; emphasis added) As applies to so much of this research, these two recent papers show the authors delighting…”